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Abstract
This Paper showcases the evolution of the metering Industry in India. It covers
the benefits of Advanced Metering Infrastructure (AMI), key challenges in
implementing AMI, popular communication standards and innovative business
models for rolling out AMI in India. The AMI market share is also calculated
based on three distinct scenarios, namely, Conservative, Moderate and
Aggressive. Furthermore, this Paper provides recommendations for deploying
large scale rollout of AMI in India.
Disclaimer
The information and opinions in this document were prepared by India Smart Grid Forum (ISGF) and
Bloomberg New Energy Finance (BNEF). ISGF has no obligation to communicate with all or any
readers of this document when opinions or information in this document change. We make every effort
to use reliable and comprehensive information but we do not claim that it is accurate or complete. In no
event shall ISGF/BNEF or its members be liable for any damages, expenses, loss of data, opportunity
or profit caused by the use of the material or contents of this document.
Authors
Reji Kumar Pillai President, ISGF
Rupendra Bhatnagar General Secretary, ISGF
James Sprinz Associate, BNEF
Table of contents.
Abstract 2
Disclaimer 2
Authors 2
1. Introduction 4
3. AMI benefits 6
3.1. Economic benefits 6
3.2. Operational benefits 7
3.3. Other benefits 8
8. Recommendations 18
1. Introduction
The metering industry has taken rapid strides in the past few years by
traversing from automated meter reading (AMR) to smart metering, using bi-
directional communication, thereby enabling greater benefits to electricity
distribution companies (DISCOMs), customers and society. The Ministry of
Power (MoP) has come out with several transformational policy initiatives for
reforming the power sector in India. The Bureau of Indian Standards (BIS)
published standards for smart metering (IS 16444 in August 2015 and IS 15959
Part 2 in February 2016). The Central Electricity Authority (CEA) followed with
functional requirements for advanced metering infrastructure (AMI) and
technical specification of smart meters in August 2016.
In July 2016, India Smart Grid Forum (ISGF) submitted a White Paper, AMI
Rollout Strategy and Cost-Benefit Analysis for India, to MoP that presents
a detailed cost-benefit analysis of different rollout scenarios. ISGF strongly
advocates deployment of smart meters to all customers on a feeder primarily
because of the potential to reduce aggregate technical and commercial (AT&C)
losses and the substantially lower communication cost per endpoint when the
full feeder is covered. Subsequently, in September 2016, CEA published an
amendment to the AMI rollout strategy by stating that deployment of smart
meters should be done by area or feeder.
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below:
1999: IS 13779 2016: National Tariff Policy 2016: AMI Rollout Strategy and CBA
Indian Standard for electronic Reiterates goals of MoP for for India
meter deploying smart meters ISGF publishes White Paper and
submits to MoP and CEA
2011: IS 15959 2015: IS 16444 2016: CEA strategy for AMI rollout
Standard for electronic meters Indian Standard for smart meter CEA announces strategy for
rollout of AMI in India
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module capable of two-way communication. A remote connect/disconnect
switch is also typically included.
An in-KRPH GLVSOD\ ,+' LV D GHYLFH NHSW LQ WKH FRQVXPHUV premises that
visualises metering data. They are intended to increase awareness of energy
use and support energy efficiency and demand response applications.
However, with the widespread adoption of smartphones, there is less demand
for dedicated energy monitoring displays. Utilities may prefer to develop
smartphone apps for customers rather than invest in IHDs.
3. AMI benefits
AMI is expected to achieve the following benefits:
Loss reduction
AMI can remotely detect meter tampering and enable real time energy
accounting. This reduces theft through by-passing the meter, thereby
substantially reducing aggregate technical and commercial (AT&C) losses. AMI
will also streamline the billing, or meter-to-cash, process considerably.
With meter data time stamped at 15 minute intervals, AMI enables near real-
time estimation of customer demand. This improves utility load forecasting and
enhances their ability to procure the right volumes of power. Utilities can also
implement time-of -use (ToU) tariffs for different categories of customers and
encourage load shifting with demand response programs. These measures
could reduce utility exposure to expensive power during the peak hours.
Traditionally utilities know about an outage when they receive complaints from
affected customers. Service restoration requires utility crews to identify the area
and rectify the fault a time consuming and expensive process. The Bureau of
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DQG ILUVW EUHDWK PHVVages, which inform utilities when power has failed or
resumed. This will reduce outage restoration times leading to financial savings
and improved customer satisfaction.
Reduction in errors
There are always chances of human errors when meters are read manually or
even via automatic hand-held devices. In addition, the process is time-
consuming. By delivering meter data automatically over communication
networks, AMI eliminates human error from the meter reading process.
Smart meters are capable of measuring specific aspects in near real-time, such
as power factor, over or under voltage, and over current. This helps utilities to
enhance system power quality in conjunction with power quality data from other
sources. Improved power quality also leads to lower power losses.
Asset optimization
Remote functionality
x By slashing truck rolls for meter reading and mitigating AT&C losses, smart
meters can potentially reduce the carbon footprint oIDXWLOLW\VVHUYLFHDUHD
x With the use of web-portals, mobile apps, or in-home displays, customers
can monitor and potentially lower their energy consumption.
x Some AMI systems allow customers to use their smart meter as central hub
from which to monitor or control other electrical loads.
Financial strength
Indian utilities are highly indebted and are undergoing financial restructuring as
part of the UDAY reforms. The typically high upfront costs of smart meter
projects can be prohibitive for utilities with limited access to capital.
Limited awareness
As AMI is new in India, regulators and DISCOMs are still trying to understand
its nuances. As a result, regulators and DISCOMs often find it hard to justify
investments in AMI. Also, limited availability of information on successes in AMI
deployments leads to an unclear picture in the minds of the decision makers.
In most government tenders in India, the lowest bidder is awarded the contract.
This often leads to the deployment of unproven technologies and systems by
inexperienced parties. Often the lifecycle cost of such systems comes out to be
much higher that the anticipated cost.
Customer engagement
Implementation of AMI
DISCOMs do not have one officer or business unit responsible for AMI. Instead,
multiple officers and distinct working groups look after different aspects of smart
meter projects. This leads to delayed and incorrect implementation of the
technology.
The India Smart Grid Forum proposes several leasing and service models
instead. These are explored below:
Since the quantity of meters is expected to be in the tens of millions, the capital
requirements are likely beyond the capacity of the DISCOMs. Instead, a
financial intermediary a bank, Power Finance Corporation (PFC) or another
financial institution will buy the meters, communication devices and other
equipment and lease it to the DISCOMS in return for monthly payments over a
period of 10 years.
ISGF proposes that utilities use a metering services agency (MSA) responsible
for project management and O&M. These services would include selecting and
testing equipment, communication infrastructure, and software to standards
defined by the DSICOM and region. Installing meters at customer premises and
establishing the communication network. Commissioning the AMI system and
integrating it with other utility IT. Finally, operating and maintaining the system
for at least 10 years and ensuring it meets standards specified in mutually
agreed service level agreements.
Utilities can either finance the project themselves while leaving O&M to the
MSA, or they can outsource the entire process and bring in a financing agency
to back the project.
components:
Using the above costs we can assess the costs of rolling out smart meters
across four financing scenarios:
Assuming the life of the metering project is 10 years, the cost and complexity
for utilities in each scenario is the following:
EPC and
1.8 2.6
services
Leasing and
5.8
services
Upfront Recurring
Source: Bloomberg New Energy Finance; ISGF. Note: costs are nominal, converted to dollars
using average 2016 rates. Assumes third-party leasing and service agencies have a hurdle
rate of 12.5%.
Despite being the highest cost per meter per month, the leasing and services
model requires the least technical knowledge and financial strength from
DISCOMS and is therefore recommended by ISGF. The low risk, and benefits
of financial and technical support outweigh the additional costs.
With the Ministry of Power (MoP) announcing its ambitious target of deploying
smart meters for all customers with monthly consumption over 200 kWh by
December 2019, the DISCOMs are scrambling to fulfill this directive. Many
DISCOMs have already released large tenders to purchase smart meters
(Table 3) and many more are expected to follow suit.
The estimated number of customers who consume more than 200 kWh per
month is about 35 million. However, following the rollout strategy White Paper
published by ISGF in July 2016, the Central Electricity Authority (CEA)
announced in August that smart meters must be installed by feeder or by area.
As a conservative estimate, we assume that about 10 million smart meters will
be installed by December 2019.
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6.1. Uptake
New project announcements indicate that PLC is losing favor. The bulk of
contracts awarded for AMI networks since 2015 have gone to wireless
technologies in particular RF mesh and cellular. In part this reflects regional
trends: although EMEA will be the leading market, excluding China, for smart
meter installations through 2020, much of the communication infrastructure has
already been contracted or selected. New announcements are predominantly
outside of Europe, where other communication protocols are preferred. It is
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JDSVZKHUHFRYHUDJHIURPWKHSULPDU\Wechnology was poor, today cellular is
increasingly the leading choice. In the Netherlands and Uzbekistan, for
example, the majority of endpoints will be connected over cellular.
Global cumulative smart electricity meter installations hit 674m in 2016 and will
expand a further 50% past 1bn by 2020. Today the vast majority of global smart
meters reside in Asia-Pacific, primarily China. State Grid Corporation of China
and the smaller China Southern Grid have 444m units since 2009. This burst
of activity overshadows other regions globally. The US more than tripled its
smart meter base in the same period and by the end of 2016 more than 70m
customers have smart meters. Italy, the earliest smart meter market, finished
its rollout in 2010 and is now starting a second phase of deployments.
2010 '11 '12 '13 '14 '15 '16 '17e '18e '19e '20e
EMEA AMER APAC
Source: Bloomberg New Energy Finance. Note: excludes smart gas meters.
Outside of China, Europe will be the leading market globally Bloomberg New
Energy Finance expects 143m smart meters to be installed between 2017 and
2020. Countries such as France, the Netherlands and the UK will race to meet
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takes second place after China, installing an annual average of 11m meters
through the rest of the decade. By 2020 the rest of the Americas will be
installing more smart meters than the US as markets such as Mexico and Brazil
pick up the pace.
The outlook for India rests heavily on which options within this paper are
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smart meters are installed by 2020.
7.2. Investment
Despite large volume of meters installed, China was only briefly, over 2012
14, the largest market by investment. Low cost smart meters have limited the
dollar size of this market. The global smart meter industry has moved through
two distinct investment cycles and is now entering a third. The first was led by
a boom in US smart metering caused by the Smart Grid Investment Grant
which peaked in 2012. The second period saw Asia-Pacific become the largest
market, led by China but then Japan from 2015. We are now in a period of
19.7
17.5 18.1
16.3
12.9
2010 '11 '12 '13 '14 '15 '16 '17e '18e '19e '20e
EMEA AMER APAC
Source: Bloomberg New Energy Finance. Note: excludes smart gas meters.
8. Recommendations
Services and leasing model
When selecting technology, DISCOMs should think not only of what smart
meter applications their networks will be required for but of other potential smart
grid or utility use cases. Low latency, high bandwidth networks will be more
capable diverse applications, such as distribution automation, but these come
with added cost. International metering vendors increasingly offer a broad
spectrum of additional services that can be applied once a metering rollout is
complete. Utilities should investigate these before deciding on a network
technology to ensure they are making the most of their investment.
Internal capacity
Customer awareness
The National Smart Grid Mission has allocated 2 million rupees ($29,759) for
each of the 60 state-owned DISCOMs to implement customer engagement
programs. Utilities should take this opportunity to ensure their metering rollouts
are inclusive of, and beneficial to, all customer groups.
Arbitrary requirements
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